News

UK cruise sector “under pressure to fill capacity” unless conceptions change - report

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 21 August 2014 21 August 2014

The cruise sector will be under increasing pressure to fill capacity unless consumers start considering a holiday at sea as on a par with regular land-based holidays, a senior industry executive in the UK was quoted as saying.

Royal Caribbean International sales director Ben Bouldin issued the warning just days before taking trade partners to the shipyard in Germany where the line’s three new ships are being built, according to a daily news bulletin of Travel Weekly.

“Over the last few years the industry has struggled to grow the [UK] cruise market beyond 1.7 million people. This has to change if every line is to fulfill its aspirations – Royal Caribbean included – or else we’ll be really up against it.”

Industry challenges do not seem to be limited to the UK alone, however.

The combined 2013 net profits of Carnival Corp & plc and Royal Caribbean Cruises Ltd (RCCL), parent company of Royal Caribbean International, were only slightly higher than the figure they reached in 2003 and down by almost half from the peak year 2007, according to Odo Maritime Research report on the cruise industry.

The total number of passengers the two groups carried was 77% higher in 2013 compared to 2003 and the two majors control about two thirds of all berths in the industry.

Norwegian Cruise Line, the industry’s number three, achieved net yields in 2013 that exceeded those it reached any time in the 10 year review period, while both Carnival group and RCCL still had not caught up with pre-crisis levels, the figures gathered by Odo Maritime Research show.

Royal Caribbean International is preparing to launch Quantum of the Seas in November, followed by sister ship Anthem of the Seas in spring 2015. The last named vessel will replace Independence of the Seas as the line’s principal ship in the UK next year

The line claims the two new vessels will begin to “change people’s perceptions of cruising” due to their technical and entertainment advances. But, taking a sideswipe at Princess Cruises, which recently allowed one of its ships to be featured in a reality TV show, Stuart Leven, Royal Caribbean UK director, cautioned.

“Clearly the hardware alone won’t be enough to dispel the myths of cruising, which unfortunately continue to be reconfirmed by others, if we’re to really open up our products to the broader land-based marketplace – the 28.3 million outside of those who cruise regularly,” he was quoted by Travel Weekly as saying.

Leven added: “We’ll be approaching things quite differently. We worked the social space hard during the recent Princess fly-on-the-wall documentary with the message ‘Cruising doesn’t have to be this way!’, and this is really just the start.”

Bouldin said: “Our two new ships will provide holidays like no other and, as such, the strapline we’re using for Anthem is ‘This changes everything’. There is no aspect of our business we are not reviewing to improve for both our trade partners and our consumers.”

Tallink issues profit warning after sharp deterioration in second quarter and first half results

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 14 August 2014 14 August 2014

AS Tallink Grupp, the Estonian cruise ferry company, has warned that its full year results would be weaker than those in 2013 on competition and demand woes.

“Due to increased competition and continuously weak Nordic economic environment the Management expects the results to be weaker for the 2014 financial year compared to the last year,” the company said in a statement.

Tallink unveiled a second quarter net profit of €6.1 million, down from €9.3 million in the same period last year. Revenue fell to €246.4 million from €249.0 million. For the first half of 2014, the group’s net loss widened to €17.3 million from €8.3 million on revenues of €434.7 million, down from €439.6 million a year earlier.

In the full year 2013, the group made a net profit of €43.3 million on revenues of €941.8 million.

“In the second quarter the Estonia-Finland route showed a slight decline with passengers numbers decreasing by 2.7%, cargo units transported increased by 6.6%, the sales numbers remained on the last year’s level,” the company said.

Tallink’s operations were affected by the shuttle vessel Star being out of operation for 68 trips in April, undergoing car deck ramp repairs. The ship was only partially replaced during that time. In the same time the competitors on the route have increased the number of departures.

“In the second quarter the segment result for the Finland-Sweden segment was €4.9 million lower than last year. The decline came from the Turku-Stockholm route, where revenue decreased due to the vessels Galaxy and Baltic Princess being out of operations for scheduled maintenance works and passengers’ spending showing weaknesses in an overall weak macroeconomic development,” Tallink ststed.

Meanwhile the recently upgraded cruise ferry Silja Serenade on the Helsinki- Stockholm route has delivered positive developments. Higher customer satisfaction and on-board spending levels are confirming that the investment was successful and has a positive effect to the business in the longer run.

The group’s vessels carried nearly 2.4 million passengers,which is 0.5% more compared to the same period last year. The number of cargo units transported decreased by 1.0% and the number of passenger vehicles transported increased by 0.7% for the same period as last year.

TUI AG cruise operations improve results as Hapag-Lloyd recovers and TUI Cruises shine

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 14 August 2014 14 August 2014

TUI AG, the German tourism group, has reported an improved performance for its cruise operations that comprise of Hapag-Lloyd Kreutzfahrten and a 50% stake in TUI Cruises on the recovery of the first-named company and continued strength of TUI Cruises.

“Following a weak performance in the first half of the year, additionally impacted by two dry-dock periods of Europa, Hapag-Lloyd delivered a positive development in the third quarter of 2013/14. TUI Cruises continued to record a very successful business performance, also driven by the commissioning of Mein Schiff 3 in June 2014,” the company said in a statement.

In the third quarter of its financial year, TUI’s cruise operations generated revenues of €63.9 million, slightly down from €67.4 million in the same period a year earlier. Operating result (EBITA) improved to €1.7 million from €0.8 million.

Fos the first nine months of the 2013-14 financial year, the revenues reached €213.1 million, an increase from €188.0 million year-on. EBITA improved to negative by €1.7 million compared to a figure negative by €59.2 million in the same period a year earlier.

“TUI Cruises commissioned the first new built vessel, the ‘Mein Schiff 3’; the fleet expansion is now being turned into action with the two vessels on order to be delivered until 2017. The rising demand for the luxury cruise segment of Hapag-Lloyd Kreuzfahrten in the third quarter, sup- ports the turnaround in the Cruise Sector in the full financial year,” the company said.

Sharp increase in turnover in the nine month period was driven by the capacity expansion due to the commissioning of the Europa 2 that joined the Hapag-Lloyd fleet in the summer of 2013. “As the joint venture TUI Cruises is measured at equity in the consolidated financial statements, no turnover is shown for TUI Cruises,” TUI AG said.

“In the first nine months of 2013/14, the Cruises Sector had to carry adjustments of €16.0m for the utilisation of provisions formed in the prior year for pending losses from occupancy risks at Hapag-Lloyd Kreutzfahrten,” TUI AG pointed out.

In the first nine months of 2013/14, occupancy of the fleet operated by Hapag-Lloyd Kreuzfahrten declined by 4.1 percentage points versus the prior year to 66.8%. “A total of 314,993 passenger days were generated, up 10.0% year-on-year. This was mainly attributable to the operation of Europa 2, which had been commissioned in May 2013 and therefore not yet been fully included in the relevant prior-year reference period. The accumulated average rate per passenger per day grew by 3.2% to €422 in the first nine months,” TUI AG said.

Following the scheduled decommissioning of Columbus 2, which has been redelivered to Oceania Cruises and for whom it has re-entered service as Insignia following a refit, from the fleet in the third quarter 2013/14, Hapag-Lloyd will focus on luxury and expedition cruises in future. “It will engage in international marketing activities in each of the segments with Europa 2 in the luxury segment and Hanseatic in the expedition cruise segment. Europa and Bremen will only be offered in the German-speaking market in future,” TUI AG said

In the first nine months of 2013/14, TUI Cruises continued to record a very positive development of the operating indicators of its fleet. At 101.0%, occupancy rose by 0.9 percentage points year-on-year (based on double occupancy). The continued high load factor was driven by Mein Schiff 1 and 2 with their trade lanes Caribbean and Canaries (winter season 2013/14) and Nordland/Baltic Sea (summer season 2014). Mein Schiff 3, the third ship of the fleet, started its operation towards the end of the period under review in June 2014 with its maiden voyage to

10 Majorca. In the first nine months of 2013/14, TUI Cruises recorded a total of 1,070,835 passen- ger days. The average rate per passenger per day was €158, up 7.5% year-on-year.